The wholesale gas price for the European market for next month’s delivery today exceeded €33 per megawatt-hour (MWh) and is close to this year’s high. Analysts see the cause mainly in protracted maintenance and related outages at processing facilities in Norway. Compared to the same period last year, however, the gas price is still significantly lower.
Gas Futures Surge in Europe
Shortly after 10:00 CET, the price of the key gas futures contract for June delivery showed an increase of more than two percent to EUR 33.50 per megawatt-hour at the Title Transfer Facility (TTF) virtual trading hub in the Netherlands. In early January, the gas price was above 34 euros, while the lowest this year was in February, when it fell to 23 euros. By contrast, a year ago it was around €48/MWh. TTF prices are a determinant for the European market.
Norwegian Production Disruptions
The Troll field in the Norwegian part of the North Sea is now off production, as is the Kollsnes processing plant near Bergen in western Norway. Gas supplies have been reduced due to maintenance and investors are now worried that it will take longer to return to normal against initial expectations, Trading Economics wrote. Norway is a key gas producer in Europe.
Temporary Supply Constraints
Pipeline gas supplies to Europe fell to 178.9 million cubic meters per day on Tuesday, the lowest since last September. But supplies are expected to gradually return to normal by the end of May. Meanwhile, warmer weather forecast by meteorologists for the end of May is dampening gas demand. As a result, gas storage in Europe is more than 67 percent full.
Impact of Environmental Policies on Gas Prices
Wholesale gas prices started to rise significantly in the autumn of 2021, before the war in Ukraine. Some economists say this is due to the European Green Deal, in which the European Union set a timetable for a rapid shift away from fossil fuels. In the summer of 2022, well after the start of the war in Ukraine, when the EU began rejecting Russian gas, the price of the raw material in the TTF briefly exceeded 300 euros per megawatt-hour.
Source: čtk
